Exclusive: DBRS to rate all euro zone sovereigns by year-end


DBRS plans to rate the credit of all euro-zone sovereigns by year-end, from the current 10 of 17, which will give the now-missing countries one more way for the ECB to weigh how valuable each nation's debt is as collateral.

The move is part of a larger push at DBRS to rate more sovereigns, from the current 26 to closer to 50, including a broader expansion in Asia.

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"Our immediate target is to ensure that we have the whole euro zone covered," said Alan G. Reid, group managing director at DBRS.

"Then you'll see us building out maybe greater coverage within the European Union," he said, as well as ratings throughout Asia, where coverage is now limited.

DBRS is one of only four rating agencies used by the European Central Bank in figuring out whether to discount sovereign debt used as collateral by banks.

As a result, the planned coverage for Greece, Cyprus, Malta, Slovakia, Luxembourg, Estonia and Slovenia could give those countries one more opportunity to hold their bonds' value at the ECB as collateral for banks.

That's because the ECB, in determining how to value sovereign debt for collateral, uses the security's highest rating from among the four approved rating agencies.

Sub-A-rated bonds, for example, get an automatic extra 5 percent charge.

Last year DBRS was the only one of the four agencies to keep its Spain sovereign rating at A (low), saving Spanish bonds from that extra charge.

The ECB also considers ratings from Moody's Investors Service, Fitch and Standard & Poor's in its determination.

DBRS gained significance in Europe at the start of 2008 when the ECB added it to the list of firms whose ratings govern which bonds can be used as collateral in its lending operations.

(Reporting by Luciana Lopez; Editing by Theodore d'Afflisio)